It has been shown that tumors have developed numerous ways to escape tumor specific immune responses. These mechanisms will ultimately not only enhance tumor growth, but also impair the effect of immune based therapies in cancer. Myeloid derived suppressor cells represent a recently identified cell population, which has been shown to impair tumor specific immune responses both in mice and human with liver cancer. Liver cancer occurs in the majority of cases in patients with an underlying chronic liver disease such as hepatitis. Chronic infections can lead to an increase in the frequency of MDSCs. We are investigating the specific role of MDSCs in the context of hepatitis induced HCC formation in mice.We have been able to demonstrate that MDSC accumulate in the liver of subcutaneous tumor bearing mice. These cells exacerbate inflammation after treatment of animal with hepatitis-inducing agent Concanavalin A. ConA treatment abolishes suppressive function of MDSC. In parallel, they show up-regulation of costimulatory molecules and expression of IL-12, TAP-1, TAP-2, eotaxin, whereas in vitro treatment of MDSC enhances expression of IL-1alpha, IL-6, IL-12. Taken together, inflammatory conditions trigger transformation of suppressive MDSC into pro-inflammatory neutrophiles and macrophages/antigen presenting cells which contribute to enhancement of the inflammation in ROS and inflammatory cytokine/chemokine dependent manner.